As a result, in order to comply with Chinese law, AWS sold certain physical infrastructure assets to Sinnet, its longtime Chinese partner and AWS seller-of-record for its AWS China (Beijing) region.
USA e-commerce heavyweight Amazon.com will sell equipment for its Chinese cloud services to a local partner to comply with new laws that have tied the hands of global operators reliant on the free flow of data. In China, regulations require Amazon to operate via a local partner before offering the services to customers.
However, like its peers, Amazon has found it hard making headway in China, which is dominated by local tech giants Alibaba and Tencent Holdings Ltd. Companies targeted by the regulations are required to carry out a security self-assessment or obtain approval from the relevant regulator before transferring the controlled data overseas.
Amazon today rejected media reports tying its asset sale to an imminent departure from the Chinese market. Microsoft already operates its Azure cloud service in China with the China-based company 21Vianet Group.
Commenting on its decision to sell the entire business, Amazon said, "No, AWS did not sell its business in China and remains fully committed to ensuring Chinese customers continue to receive AWS's industry leading cloud services".
The spokesperson added that the company was excited about its business in China and its potential for growth.
Calls to Sinnet's investor relations office went unanswered. The service has outperformed its competitors throughout the world with a market share of over 40% globally in 2016, much more than Microsoft and Alibaba, according to Gartner.
Other tech giants from the US faced hard situations in China.
Foreign firms in China have long complained about local restrictions that appeared to favour domestic players.
AWS launched in China back in 2013, partnering with both ChinaNetCenter and Sinnet at launch.